Domestic High Frequency | Divergence in Production Trends (Shenwan Macro · Zhao Wei Team)

Report Body

4. High-Frequency Monitoring of Production: Diverging Trends in Manufacturing and Construction

In manufacturing, blast furnace operating rates have remained stable, while apparent steel consumption has continued to rebound. In the fifth week after the holiday, the blast furnace operating rate increased by 1.2% month-over-month and held at 1.5% year-over-year; apparent steel consumption increased by 2.2% month-over-month but decreased by 0.9 percentage points year-over-year to 4.1%. Steel’s social inventories declined somewhat, down 1.7% month-over-month.

The chemical sector’s operating rates have risen somewhat, while the consumption-link operating rates have declined. In the fifth week after the holiday, within the chemical chain, the soda ash operating rate fell 4.5% month-over-month but rose 1.2 percentage points year-over-year to -1.4%; the PTA operating rate increased 3.6% month-over-month and rose 5.7 percentage points year-over-year to 3%. In the downstream consumption chain, polyester filament operating rates fell 0.9% month-over-month and dropped 2.2 percentage points year-over-year to -5.3%; automotive semi-steel tire operating rates were weak, up 0.1% month-over-month but down 0.2 percentage points year-over-year to 4.5%.

For the construction industry, both cement production and demand have improved somewhat. In the fifth week after the holiday, the national cement grinding operating rate increased 2.1% month-over-month and rose 2.6 percentage points year-over-year to 14.1%; cement shipment rate rose 7.3% month-over-month and rose 0.2 percentage points year-over-year to 0.8%. Regarding inventories, the cement storage-capacity ratio increased 0.9% month-over-month and rose 3 percentage points year-over-year to 7.3%. In addition, the cement average weekly price rose 0.9% month-over-month.

Glass production continues to grind at the bottom, while asphalt operating rates are overall weak. In the fifth week after the holiday, glass output was flat versus the prior week, with a 0.3 percentage-point year-over-year decline to -7.5%; glass apparent consumption fell 5.7% month-over-month and declined 5.7 percentage points year-over-year to 6.6%. Reflecting infrastructure investment, the asphalt operating rate increased 0.7% month-over-month but fell 0.1 percentage point year-over-year to -6.4%.

5. High-Frequency Monitoring of Demand: Real-estate Transactions Continue Improving; Passenger Flow Travel Intensity Remains Resilient

Year-over-year national residential property sales improved somewhat. In the fifth week after the holiday, the daily average transaction area of commodity housing across 30 major and medium-sized cities increased 14.8% month-over-month and rose to 25.5% year-over-year. By city tier, first-, second-, and third-tier cities rose 9.1%, 15.5%, and 20.7% month-over-month, respectively; year-over-year rates were 25.3%, 63%, and 33%, respectively.

Freight volumes overall remained resilient. In the fourth week after the holiday, railway freight volumes and highway truck traffic volumes related to domestic demand fell 3.2 and 1.2 percentage points year-over-year to 4.3% and 7.6%, respectively. For export-related measures, port cargo throughput fell 1.4 percentage points year-over-year to 2.9%, while container throughput rose 10.7 percentage points year-over-year to 22.1%.

Passenger travel intensity is still at a high level, and the execution (operation) of flights improved somewhat. In the fifth week after the holiday, the national migration scale index remained at 19.8% year-over-year. Domestic and international flights executed increased 0.5% and 1.2% month-over-month, respectively; year-over-year, they rose 7.7 and 2.2 percentage points to 10.2% and 7.1%, respectively.

Entertainment and cinema consumption improved somewhat year-over-year, while auto sales were weak. In the fourth week after the holiday, the number of moviegoers improved 17.8 percentage points year-over-year to -62.6%, and box office revenue increased 17 percentage points year-over-year to -64.8%. For auto sales, retail volume of passenger vehicles rose 10.9% month-over-month and increased 2.9 percentage points year-over-year to -23.1%; wholesale volume of passenger vehicles rose 13.2% month-over-month, but fell 9.8 percentage points year-over-year to -33.6%.

On the export side, container shipping prices improved somewhat, with larger rate increases on Southeast Asia and West America routes. In the fifth week after the holiday, the CCFI composite index rose 1.6% month-over-month. Among them, rate increases on the Southeast Asia and Mediterranean routes were relatively large, rising 2.2% and 2.3% month-over-month, respectively. In addition, the BDI average weekly price declined somewhat, down 1.2% month-over-month.

6. High-Frequency Monitoring of Prices: Agricultural Product Prices Are Weak; Industrial Product Prices Diverge

Agricultural product prices are overall weak. In the fifth week after the holiday, pork, vegetables, and fruit prices fell, down 1.3%, 0.9%, and 0.7% month-over-month, respectively; egg prices rose 1.6% month-over-month.

Industrial product prices show diverging trends. In the fifth week after the holiday, the Nanhua Industrial Goods Price Index fell 0.2% month-over-month. Among them, energy and chemical prices rose 1.2% month-over-month, while metal prices fell 0.6% month-over-month.

Risk Warning

1. Economic transformation faces short-term constraints. Changes in the domestic and overseas situation cause domestic demand recovery to be slow, and the inflation level remains low.

2. The implementation effect of policies is not as expected. Fiscal and monetary policy has been tightened further, but the transmission effect has weakened.

3. The pace of investment recovery is slow. The settlement of corporate payables is not as expected, and investment willingness has declined somewhat.

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